Automatic vs Manual Investing: Role of Past Performance

Said Kaawach; Oskar Kowalewski; Oleksandr Talavera

Automatic vs Manual Investing: Role of Past Performance

Said Kaawach, Oskar Kowalewski, Oleksandr Talavera

Research output: Working paper › Preprint

Abstract

Using unique data from a leading peer-to-peer (P2P) lending platform, we investigate the link between past investment performance and choice of auto-investing tool. Our results suggest that investors with poorly performing loan portfolios are more likely to switch automatically. This negative relationship can be explained by algorithmic aversion or investor inattention. In other words, the results suggest that good-performing investors who pay close attention to their loan portfolios or are not interested in using automated services are more likely to rely on themselves in manual mode. These results are robust to alternative specifications.

Original language	English
Publisher	IDEAS
Number of pages	34
Publication status	Published - 2023

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https://ideas.repec.org/p/bir/birmec/23-04.htmlLicence: Unspecified

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title = "Automatic vs Manual Investing: Role of Past Performance",

abstract = "Using unique data from a leading peer-to-peer (P2P) lending platform, we investigate the link between past investment performance and choice of auto-investing tool. Our results suggest that investors with poorly performing loan portfolios are more likely to switch automatically. This negative relationship can be explained by algorithmic aversion or investor inattention. In other words, the results suggest that good-performing investors who pay close attention to their loan portfolios or are not interested in using automated services are more likely to rely on themselves in manual mode. These results are robust to alternative specifications.",

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Automatic vs Manual Investing: Role of Past Performance

Abstract

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